PingDelivery has been in operation for two years. Being a mixture of IT and logistics, it has established itself in the complex markets of the developing countries of Africa, South America and South-East Asia. Nowadays, the project is developing a global goods delivery chain. It is based on its own technology platform which has been joined by several major clients from the e-commerce sector. Anton Buter, one of the project cofounders, told Invest Foresight the story of his team.
PingDelivery was not the first logistics project for its founders. Prior to PingDelivery, Anton Buter had worked for a strategic consulting Big4 company where he handled corporate reorganization and automation and IT systems implementation in banks, manufacturing, retail and logistics companies.
In 2016 Buter discussed with a partner the issue of expanding his sales in developing countries where residents have no access to such e-commerce giants as Alibaba, eBay, and Amazon. The countries where courier delivery is underdeveloped, the servicing quality is poor. Another aspect is the local mentality specifics, hence developing a remote business is a risky undertaking.
As a pilot test, PingDelivery organized delivery to ultimate customers by aggregating courier services. Company representatives found local delivery companies in Latin America (Argentina, Peru, Chile, Mexico), Asia (India, Malaysia, Indonesia, Sri Lanka) and negotiated joint operations. Yet the result the company got was absolutely unsatisfactory. The very first report demonstrated that only 20% to 30% of the orders were successfully delivered.
From its experience of operating in various countries, the company now knows that residents of South-East Asia, Latin America and Africa do not usually carefully plan their time and do not feel responsibility for observing the agreements reached. As for impulse purchases which require payment upon receipt, inefficient courier delivery results in goods remaining unpaid for, since by the time of delivery a buyer may simply run out of money. Besides, in developing countries it is often hard to get precise information on the status of the goods delivery. According to Anton Buter, courier services may send Excel files containing wrong delivery status data, varying prices, etc. So everything was to be continuously double-checked and brought to a uniform format. That in turn resulted in delays with money transfers. At times, money would just be stuck in the accounts of the couriers.
After some experimenting it was found the most successful business model was the one including some substantial elements, namely:
- A candidate’s quality scoring and professional acceptability assessment and documents check;
- A minimum involvement with the delivery team’s operation. An entrepreneur should hire a team of couriers and manage it all by himself;
- A uniform standard which can guaranty reasonable transparency of an entrepreneur’s activity;
- Provision of software to every entrepreneur;
- A system of deposits. Since an entrepreneur’s revenue is dependent on the number of deliveries, chances of fraud should be reduced. So a number of the orders depends on the amount of a security deposit provided by an entrepreneur.
PingDelivery’s new business modes helped conquering corrupt and criminalized markets at three continents. Nowadays, the company operates in 16 countries, including Mexico, Columbia, Morocco, Egypt, Nigeria, India, Sri Lanka, Indonesia, Philippines, Chile, Peru, CIS nations. In every country, a local team is developing around a local agent of the company who must be fluent in English. An agent communicates with his couriers in their native language. In August, the company broke even and started making profit. The startup team consists of 16 people, including an IT group of ten people, four developers of agent delivery network, a lawyer and a financial manager. A product delivery price averages $6, while software transactions are between $0.25 and $0.5 depending on the functions involved, communication type and agreements reached. The platform has been joined by over a thousand users from the e-commerce industry and several dozen clients. The platform processes more than 50,000 orders a month.
By Christina Firsova